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$400K will get you a good house in a good (but not nice) hood in Seattle. Nice 'hoods and or a view will bump that up considerably. Going north to Edmonds as island suggested or south towards Tacoma as Paul says will get you a much nicer place and out of the dense-pack that is Seattle and still be withing 30 minutes or so (as long as it is not rush hour(s)). West to Bainbridge or Poulsbo is becomming more popular but the pennisula can be frustrating to get into/out of.
Going an hour out of town gets you lots more options/bennies and all comes down to how badly you need to be close to Seattle.
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gary
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